•Board of Directors Declares 7.5% Increase in the Companys Regular Quarterly Cash Dividend to $0.72 per Share and Authorizes an Additional $5.0 Billion of Share Repurchases

•Net income of $617 million and core income (formerly referred to as operating income) of $614 million, included significant catastrophe losses of $226 million after-tax ($347 million pre-tax).

•Quarter benefited from strong underlying underwriting results and net investment income that increased 9% after-tax over the prior year quarter as a result of higher private equity returns.

•The combined ratio, which includes catastrophe losses, was 96.0%; the underlying combined ratio remained strong at 91.7%.

•Record net written premiums of $6.495 billion up 5% from the prior year quarter, reflecting growth in all segments.

•Total capital returned to shareholders of $476 million in the quarter, including $286 million of share repurchases. Reduced share repurchases from recent quarters to provide financing flexibility for pending acquisition of Simply Business.

•Book value per share of $84.51 and adjusted book value per share of $81.56 increased 2% and 1%, respectively, from year-end 2016.

•(1 )As a result of recent SEC insurance industry guidance concerning terminology, what we previously referred to as "operating income (loss)" in our public disclosures we now refer to as "core income (loss)." Additionally, the related financial measures of "operating income (loss) per share" and "operating return on equity" were changed accordingly. There were no changes in the calculation of these amounts.

The Travelers Companies, Inc. today reported net income of $617 million,
or $2.17 per diluted share, for the quarter ended March 31, 2017,
compared to $691 million, or $2.30 per diluted share, in the prior year
quarter. Core income in the current quarter was $614 million, or $2.16
per diluted share, compared to $698 million, or $2.33 per diluted share,
in the prior year quarter. Net and core income in both the current and
prior year quarters were impacted by significant catastrophe losses of
$226 million after-tax ($347 million pre-tax) and $207 million after-tax
($318 million pre-tax), respectively. The decreases from the prior year
quarter were primarily driven by lower net favorable prior year reserve
development that included a $51 million after-tax ($62 million pre-tax)
impact from the UK Ministry of Justices recent "Ogden" discount rate
adjustment, a lower underlying underwriting gain (i.e., excluding net
favorable prior year reserve development and catastrophe losses) and
higher catastrophe losses, partially offset by higher net investment
income. The current quarter benefited from a $39 million resolution of
prior year income tax matters, while the prior year quarter benefited
modestly from the favorable settlement of a claims-related legal matter.
Per diluted share amounts benefited from the impact of share repurchases.

Consolidated Highlights

($ in millions, except for per share amounts, and after-tax,

Three Months Ended March 31,

except for premiums & revenues)

2017

2016

Change

Net written premiums

$ 6,495

$ 6,166

5

%

Total revenues

$ 6,942

$ 6,686

4

Net income

$

617

$

691

(11 )

per diluted share

$

2.17

$

2.30

(6 )

Core income

$

614

$

698

(12 )

per diluted share

$

2.16

$

2.33

(7 )

Diluted weighted average

282.4

297.9

(5 )

shares outstanding

Combined ratio

96.0 %

92.3 %

3.7

pts

Underlying combined ratio

91.7 %

90.0 %

1.7

pts

Return on equity

10.5 %

11.6 %

(1.1 )

pts

Core return on equity

10.8 %

12.5 %

(1.7 )

pts

Change from

March 31,

December 31,

March 31,

December 31,

March 31,

2017

2016

2016

2016

2016

Book value per share

$ 84.51

$

83.05

$ 82.65

2

%

2

%

Adjusted book value per share

81.56

80.44

76.63

1

6

See Glossary of Financial Measures for definitions and the

statistical supplement for additional financial data.

"Core income of $614 million and core return on equity of 10.8%
reflected unusually high first quarter catastrophe losses that arose
from a record number of tornado and hail events," commented Alan
Schnitzer, Chief Executive Officer. "We were pleased with our underlying
underwriting results and that loss trends were stable and consistent
with our expectations for all of our businesses, including personal
auto. We were also pleased with our investment results this quarter. Net
investment income, which benefited from strong private equity returns,
increased 9% on an after-tax basis over the prior year quarter. Our
results enabled us to return $476 million to shareholders, including
$286 million in share repurchases, while adding additional holding
company liquidity to build flexibility for the funding of the Simply
Business acquisition. In recognition of our strong financial position,
the Board of Directors declared a 7.5% increase in our quarterly cash
dividend to $0.72 per share and authorized an additional $5.0 billion of
share repurchases.

"Net written premiums grew 5% to a record level this quarter, with each
business segment contributing to the growth. In our commercial
businesses, the markets in which we operate remained stable. We
continued to achieve historically high levels of retention, and renewal
rate change remained positive and improved modestly from recent
quarters. The improvement in renewal rate change reflects our focused
efforts to seek rate selectively and thoughtfully on an
account-by-account or class-by-class basis. While we always actively
seek new business opportunities, new business was down modestly from the
prior year quarter as we continued to maintain our disciplined approach
to underwriting. In Personal Insurance, net written premiums increased
by 12%, including the impact of auto rate increases that were consistent
with our plans to improve profitability. We were also pleased that we
were able to continue the momentum in growing our very profitable
homeowners business.

"With technology and innovation driving customer preferences and
expectations, advancing our digital agenda to best serve customers and
our distribution partners, now and in the future, is a key strategic
priority. To that end, during the quarter we announced an agreement to
purchase Simply Business, a leading digital provider of insurance to
small businesses in the United Kingdom. Our investment in Simply
Business will accelerate our digital agenda, building on the competitive
advantages that have enabled us to deliver industry-leading returns."

Net income of $617 million after-tax decreased $74 million due to lower
core income, slightly offset by net realized investment gains in the
current quarter as compared to net realized investment losses in the
prior year quarter. Core income of $614 million after-tax decreased $84
million, primarily driven by lower net favorable prior year reserve
development that included a $51 million after-tax ($62 million pre-tax)
impact from the recent Ogden discount rate adjustment, a lower
underlying underwriting gain as explained below and higher catastrophe
losses, partially offset by higher net investment income. The current
quarter benefited from a $39 million resolution of prior year income tax
matters, while the prior year quarter benefited modestly from the
favorable settlement of a claims-related legal matter.

Underwriting results

•
The combined ratio of 96.0%, which was impacted by significant
catastrophe losses as was the prior year quarter, increased 3.7 points
due to lower net favorable prior year reserve development (1.7
points), a higher underlying combined ratio (1.7 points) and higher
catastrophe losses (0.3 points).

•
The underlying combined ratio of 91.7% increased 1.7 points, primarily
driven by normal quarterly variability in non-catastrophe
weather-related losses and other loss activity and the timing impact
of higher loss estimates in personal automobile bodily injury
liability coverages that were consistent with the higher loss trends
we recognized in the last half of 2016.

•
Net favorable prior year reserve development occurred in Business and
International Insurance and Bond & Specialty Insurance and included
the recent Ogden discount rate adjustment. Catastrophe losses in the
first quarter of 2017 primarily resulted from wind and hail storms in
several regions of the United States, as well as a winter storm in the
eastern United States.

Net investment income of $610 million pre-tax ($480 million after-tax)
increased 9% after-tax driven by higher private equity returns,
partially offset by fixed income returns that declined in line with our
expectations due to lower reinvestment rates available in the market.

Other income/(expense) in the prior year quarter included proceeds from
the favorable settlement of a claims-related legal matter.

Net written premiums of $6.495 billion, a record level, increased 5%,
reflecting growth in all segments.

The Company repurchased 2.4 million shares during the first quarter at
an average price of $120.68 per share for a total cost of $286 million,
which was reduced from recent quarters to provide financing flexibility
for the pending acquisition of Simply Business. At the end of first
quarter 2017, statutory capital and surplus was $20.617 billion and the
ratio of debt-to-capital was 21.4%. The ratio of debt-to-capital
excluding after-tax net unrealized investment gains was 22.0%, well
within the Companys target range of 15% to 25%.

The Board of Directors today declared a quarterly dividend of $0.72 per
share, an increase of 7.5%. This dividend is payable on June 30, 2017,
to shareholders of record as of the close of business on June 9, 2017.
The Board of Directors also authorized an additional $5.0 billion of
share repurchases. This amount is in addition to the $709 million that
remained from previous authorizations as of March 31, 2017. This
authorization does not have a stated expiration date. The timing and
actual number of shares to be repurchased will depend on a variety of
factors, including the factors described below in the Forward-Looking
Statement section.

Business and International Insurance

Segment Financial Results

($ in millions and pre-tax, unless noted otherwise)

Three Months Ended March 31,

2017

2016

Change

Underwriting gain:

$

121

$

172

$

(51 )

Underwriting gain includes:

Net favorable prior year reserve development

71

93

(22 )

Catastrophes, net of reinsurance

(134 )

(148 )

14

Net investment income

470

415

55

Other income

10

33

(23 )

Segment income(2) before income taxes

601

620

(19 )

Income tax expense

133

144

(11 )

Segment income

$

468

$

476

$

(8 )

Combined ratio

96.3 %

94.8 %

1.5

pts

Impact on combined ratio

Net favorable prior year reserve development

(1.9 )

pts

(2.6 )

pts

0.7

pts

Catastrophes, net of reinsurance

3.7

pts

4.1

pts

(0.4 )

pts

Underlying combined ratio

94.5 %

93.3 %

1.2

pts

Net written premiums by market

Domestic

Select Accounts

$

755

$

724

4

%

Middle Market

1,956

1,830

7

National Accounts

288

320

(10 )

First Party

352

358

(2 )

Specialized Distribution

255

285

(11 )

Total Domestic

3,606

3,517

3

International

421

397

6

Total

$

4,027

$

3,914

3

%

(2)As a result of recent SEC insurance industry guidance
concerning terminology, what we previously referred to as "operating
income (loss)" in our public disclosures when referring to business
segment results is now labeled "segment income (loss)." There were no
changes in the calculation of these amounts.

Segment income for Business and International Insurance was $468 million
after-tax, a decrease of $8 million, primarily driven by a decrease in
net favorable prior year reserve development due to a $51 million
after-tax ($62 million pre-tax) increase in reserves related to the
recent Ogden discount rate adjustment, a lower underlying underwriting
gain as explained below, partially offset by higher net investment
income and modestly lower catastrophe losses as compared to a
particularly high level of catastrophe losses in the prior year quarter.
The current quarter benefited from a $15 million resolution of prior
year income tax matters, while the prior year quarter benefited modestly
from the favorable settlement of a claims-related legal matter.

•
Net favorable prior year reserve development primarily resulted from
better-than-expected loss experience in the Companys domestic
operations in (i) the workers compensation product line for multiple
accident years and (ii) the general liability product line for both
primary and excess coverages for accident years 2009 and prior as well
as accident year 2014, partially offset by (iii) net unfavorable prior
year reserve development in the Companys international operations in
Europe due to the recent Ogden discount rate adjustment applied to
lump sum bodily injury payouts.

Other income in the prior year quarter included proceeds from the
favorable settlement of a claims-related legal matter.

Net written premiums of $4.027 billion, a record level, increased 3%,
benefiting from continued strong retention and improved renewal premium
changes.

Segment income for Bond & Specialty Insurance was $129 million
after-tax, a decrease of $15 million, due to lower net favorable prior
year reserve development, partially offset by the current quarter
benefit from a $17 million resolution of prior year income tax matters.

Segment income for Personal Insurance was $79 million after-tax, a
decrease of $60 million, primarily driven by a lower underlying
underwriting gain as explained below, higher catastrophe losses and no
net prior year reserve development compared to net favorable prior year
reserve development in the prior year quarter, partially offset by
higher net investment income. The current quarter benefited from a $7
million resolution of prior year income tax matters.

Underwriting results

•
The combined ratio of 99.9% increased 6.2 points due to a higher
underlying combined ratio (3.4 points), no net prior year reserve
development compared to net favorable prior year reserve development
in the prior year quarter (1.4 points) and higher catastrophe losses
(1.4 points).

•
The underlying combined ratio of 89.5% increased 3.4 points, primarily
driven by the timing impact of higher loss estimates in personal
automobile bodily injury liability coverages that were consistent with
the higher loss trends we recognized in the last half of 2016, the
tenure impact of higher levels of new business in auto and normal
quarterly variability in non-catastrophe weather-related losses and
other loss activity, partially offset by a lower expense ratio.

Net written premiums of $1.964 billion increased 12%. Agency Automobile
net written premiums growth of 17% benefited from the impact of auto
rate increases that were consistent with our plans to improve
profitability and an increase in policies in force of 12% from the prior
year quarter. Agency Homeowners & Other net written premiums grew 4%,
with an increase in policies in force of 4% from the prior year quarter.

Financial Supplement and Conference Call

The information in this press release should be read in conjunction with
a financial supplement that is available on our website at www.travelers.com.
Travelers management will discuss the contents of this release and other
relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on
Thursday, April 20, 2017. Investors can access the call via webcast at http://investor.travelers.com
or by dialing 1-888-227-8942 within the U.S. and 1-303-223-4384 outside
the U.S. (use passcode 14788 for both the U.S. and international calls).
Prior to the webcast, a slide presentation pertaining to the quarterly
earnings will be available on the Companys website.

Following the live event, an audio playback of the webcast and the slide
presentation will be available on the same website. An audio playback
can also be accessed by phone at 1-800-633-8284 within the U.S. and
1-402-977-9140 outside the U.S. (use reservation 21847521 for both the
U.S. and international calls).

About Travelers

The Travelers Companies, Inc. (TRV) is a leading provider of
property casualty insurance for auto,
home
and business.
A component of the Dow Jones Industrial Average, Travelers has
approximately 30,000 employees and generated revenues of approximately
$28 billion in 2016. For more information, visit www.travelers.com.

Travelers may use its website and/or social media outlets, such as
Facebook and Twitter, as distribution channels of material Company
information. Financial and other important information regarding the
Company is routinely accessible through and posted on our website at http://investor.travelers.com,
our Facebook page at https://www.facebook.com/travelers
and our Twitter account (@Travelers) at https://twitter.com/travelers.
In addition, you may automatically receive email alerts and other
information about Travelers when you enroll your email address by
visiting the Email Notifications section at http://investor.travelers.com.

For the periods presented in this earnings release, Travelers was
organized into the following reportable business segments:

Business and International Insurance - Business and International
Insurance offers a broad array of property and casualty insurance and
insurance related services to its clients, primarily in the United
States and in Canada, as well as in the United Kingdom, the Republic of
Ireland, Brazil, Colombia and throughout other parts of the world as a
corporate member of Lloyds of London.

Effective April 1, 2017, the Companys results will be reported in the
following three business segments - Business Insurance, Bond & Specialty
Insurance and Personal Insurance, reflecting a change in the manner in
which the Companys businesses will be managed. While the segmentation
of the Companys domestic businesses will be unchanged, the Companys
international businesses, which were previously reported in total within
the Business and International Insurance segment, will now be
disaggregated among these three newly aligned business segments. The
newly aligned segments will be presented in the Companys financial
statements beginning with the period ending June 30, 2017 and prior
periods presented therein will be reclassified to conform to the new
presentation.

* * * * *

Forward-Looking Statements

This press release contains, and management may make, certain
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements, other than
statements of historical facts, may be forward-looking statements. Words
such as "may," "will," "should," "likely," "anticipates," "expects,"
"intends," "plans," "projects," "believes," "estimates" and similar
expressions are used to identify these forward-looking statements. These
statements include, among other things, the Companys statements about:

•
the Companys outlook and its future results of operations and
financial condition (including, among other things, anticipated
premium volume, premium rates, margins, net and core income,
investment income and performance, loss costs, return on equity, core
return on equity and expected current returns and combined ratios);

•
share repurchase plans;

•
future pension plan contributions;

•
the sufficiency of the Companys asbestos and other reserves;

•
the impact of emerging claims issues as well as other insurance and
non-insurance litigation;

•
the cost and availability of reinsurance coverage;

•
catastrophe losses;

•
the impact of investment, economic (including inflation, potential
changes in tax law and rapid changes in commodity prices, such as a
significant decline in oil and gas prices, as well as fluctuations in
foreign currency exchange rates) and underwriting market conditions;

•
strategic initiatives to improve profitability and competitiveness; and

•
the potential closing date and impact of the Companys acquisition of
Simply Business.

The Company cautions investors that such statements are subject to risks
and uncertainties, many of which are difficult to predict and generally
beyond the Companys control, that could cause actual results to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements.

Some of the factors that could cause actual results to differ include,
but are not limited to, the following:

•
catastrophe losses could materially and adversely affect the Companys
results of operations, its financial position and/or liquidity, and
could adversely impact the Companys ratings, the Companys ability to
raise capital and the availability and cost of reinsurance;

•
if actual claims exceed the Companys claims and claim adjustment
expense reserves, or if changes in the estimated level of claims and
claim adjustment expense reserves are necessary, including as a result
of, among other things, changes in the legal, regulatory and economic
environments in which the Company operates, the Companys financial
results could be materially and adversely affected;

•
during or following a period of financial market disruption or an
economic downturn, the Companys business could be materially and
adversely affected;

•
the Companys investment portfolio is subject to credit risk, and may
suffer material realized or unrealized losses. The Companys
investment portfolio may also suffer reduced or low returns,
particularly if interest rates remain at historically low levels for a
prolonged period of time or decline further as a result of actions
taken by central banks (a risk which potentially could be increased
by, among other things, the United Kingdoms withdrawal from the
European Union);

•
the Companys business could be harmed because of its potential
exposure to asbestos and environmental claims and related litigation;

•
the intense competition that the Company faces, and the impact of
innovation, technological change and changing customer preferences on
the insurance industry and the markets in which it operates, could
harm its ability to maintain or increase its business volumes and its
profitability;

•
disruptions to the Companys relationships with its independent agents
and brokers or the Companys inability to manage effectively a
changing distribution landscape could adversely affect the Company;

•
the Company is exposed to, and may face adverse developments
involving, mass tort claims such as those relating to exposure to
potentially harmful products or substances;

•
the effects of emerging claim and coverage issues on the Companys
business are uncertain;

•
the Company may not be able to collect all amounts due to it from
reinsurers, reinsurance coverage may not be available to the Company
in the future at commercially reasonable rates or at all and we are
exposed to credit risk related to our structured settlements;

•
the Company is also exposed to credit risk in certain of its insurance
operations and with respect to certain guarantee or indemnification
arrangements that we have with third parties;

•
within the United States, the Companys businesses are heavily
regulated by the states in which it conducts business, including
licensing and supervision, and changes in regulation may reduce the
Companys profitability and limit its growth;

•
a downgrade in the Companys claims-paying and financial strength
ratings could adversely impact the Companys business volumes,
adversely impact the Companys ability to access the capital markets
and increase the Companys borrowing costs;

•
the inability of the Companys insurance subsidiaries to pay dividends
to the Companys holding company in sufficient amounts would harm the
Companys ability to meet its obligations, pay future shareholder
dividends or make future share repurchases;

•
the Companys efforts to develop new products or expand in targeted
markets may not be successful and may create enhanced risks;

•
the Company may be adversely affected if its pricing and capital
models provide materially different indications than actual results;

•
the Companys business success and profitability depend, in part, on
effective information technology systems and on continuing to develop
and implement improvements in technology;

•
if the Company experiences difficulties with technology, data and
network security, including as a result of cyber attacks, outsourcing
relationships, or cloud-based technology, the Companys ability to
conduct its business could be negatively impacted;

•
changes in U.S. tax laws or in the tax laws of other jurisdictions in
which the Company operates could adversely impact the Company;

•
the Company is also subject to a number of additional risks associated
with its business outside the United States, including foreign
currency exchange fluctuations and restrictive regulations, as well as
the risks and uncertainties associated with the United Kingdoms
withdrawal from the European Union;

•
regulatory changes outside of the United States, including in Canada
and the European Union, could adversely impact the Companys results
of operations and limit its growth;

•
loss of or significant restrictions on the use of particular types of
underwriting criteria, such as credit scoring, or other data or
methodologies, in the pricing and underwriting of the Companys
products could reduce the Companys future profitability;

•
acquisitions and integration of acquired businesses may result in
operating difficulties and other unintended consequences;

•
the Company could be adversely affected if its controls designed to
ensure compliance with guidelines, policies and legal and regulatory
standards are not effective;

•
the Companys businesses may be adversely affected if it is unable to
hire and retain qualified employees;

•
intellectual property is important to the Companys business, and the
Company may be unable to protect and enforce its own intellectual
property or the Company may be subject to claims for infringing the
intellectual property of others;

•
changes in federal regulation could impose significant burdens on the
Company and otherwise adversely impact the Companys results;

•
changes to existing U.S. accounting standards may adversely impact the
Companys reported results; and

Our forward-looking statements speak only as of the date of this press
release or as of the date they are made, and we undertake no obligation
to update forward-looking statements. For a more detailed discussion of
these factors, see the information under the captions "Risk Factors" and
"Managements Discussion and Analysis of Financial Condition and Results
of Operations" in our most recent annual report on Form 10-K filed with
the Securities and Exchange Commission (SEC) on February 16, 2017, as
updated by our periodic filings with the SEC.

*****

GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF GAAP MEASURES
TO NON-GAAP MEASURES

The following measures are used by the Companys management to evaluate
financial performance against historical results and establish targets
on a consolidated basis. In some cases, these measures are considered
non-GAAP financial measures under applicable SEC rules because they are
not displayed as separate line items in the consolidated financial
statements or are not required to be disclosed in the notes to financial
statements or, in some cases, include or exclude certain items not
ordinarily included or excluded in the most comparable GAAP financial
measure. Reconciliations of non-GAAP measures to their most directly
comparable GAAP measures also follow.

In the opinion of the Companys management, a discussion of these
measures provides investors, financial analysts, rating agencies and
other financial statement users with a better understanding of the
significant factors that comprise the Companys periodic results of
operations and how management evaluates the Companys financial
performance. Internally, the Companys management uses these measures to
evaluate performance against historical results, to establish financial
targets on a consolidated basis and for other reasons, which are
discussed below.

Some of these measures exclude net realized investment gains (losses),
net of tax, and/or net unrealized investment gains (losses), net of tax,
which can be significantly impacted by both discretionary and other
economic factors and are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and,
therefore, their measures may not be comparable to those used by the
Companys management.

RECONCILIATION OF NET INCOME TO CORE INCOME AND CERTAIN OTHER
NON-GAAP MEASURES

Core income (loss) is net income (loss) excluding the after-tax
impact of net realized investment gains (losses), discontinued
operations and cumulative effect of changes in accounting principles
when applicable. Segment income (loss) is comparable to core
income (loss) on a segment basis. Management uses segment income (loss)
to analyze each segments performance and as a tool in making business
decisions. Financial statement users also consider core income when
analyzing the results and trends of insurance companies. Core income
(loss) per share is core income (loss) on a per common share basis.

Reconciliation of Net Income to Core

Income less Preferred Dividends

Three Months Ended

March 31,

($ in millions, after-tax)

2017

2016

Net income

$

617

$

691

Less: Net realized investment gains/(losses)

3

(7 )

Core income

$

614

$

698

Three Months Ended

March 31,

($ in millions, pre-tax)

2017

2016

Net income

$

760

$

917

Less: Net realized investment gains/(losses)

5

(9 )

Core income

$

755

$

926

Twelve Months Ended December 31,

($ in millions, after-tax)

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

Net income

$

3,014

$

3,439

$

3,692

$

3,673

$

2,473

$

1,426

$

3,216

$

3,622

$

2,924

$

4,601

$

4,208

$

1,622

Less: Loss from discontinued operations

-

-

-

-

-

-

-

-

-

-

-

(439 )

Income from continuing operations

3,014

3,439

3,692

3,673

2,473

1,426

3,216

3,622

2,924

4,601

4,208

2,061

Less: Net realized investment gains/(losses)

47

2

51

106

32

36

173

22

(271 )

101

8

35

Core income

2,967

3,437

3,641

3,567

2,441

1,390

3,043

3,600

3,195

4,500

4,200

2,026

Less: Preferred dividends

-

-

-

-

-

1

3

3

4

4

5

6

Core income, less preferred dividends

$

2,967

$

3,437

$

3,641

$

3,567

$

2,441

$

1,389

$

3,040

$

3,597

$

3,191

$

4,496

$

4,195

$

2,020

Reconciliation of Net Income per Share to

Core Income per Share on a Basic and Diluted Basis

Three Months Ended

March 31,

2017

2016

Basic income per share

Net income

$ 2.19

$

2.33

Less: Net realized investment gains/(losses)

0.01

(0.02 )

Core income

$ 2.18

$

2.35

Diluted income per share

Net income

$ 2.17

$

2.30

Less: Net realized investment gains/(losses)

0.01

(0.03 )

Core income

$ 2.16

$

2.33

Reconciliation of Segment Income to Total

Core Income

Three Months Ended

March 31,

($ in millions, after-tax)

2017

2016

Business and International Insurance

$ 468

$

476

Bond & Specialty Insurance

129

144

Personal Insurance

79

139

Total segment income

676

759

Interest Expense and Other

(62 )

(61 )

Total core income

$ 614

$

698

RECONCILIATION OF SHAREHOLDERS EQUITY TO ADJUSTED SHAREHOLDERS
EQUITY AND CALCULATION OF RETURN ON EQUITY AND CORE RETURN ON EQUITY

Return on equity is the ratio of annualized net income less
preferred dividends to average shareholders equity for the periods
presented. Core return on equity is the ratio of annualized core
income less preferred dividends to adjusted average shareholders equity
for the periods presented. In the opinion of the Companys management,
these are important indicators of how well management creates value for
its shareholders through its operating activities and its capital
management.

Average shareholders equity is (a) the sum of total
shareholders equity excluding preferred stock at the beginning and end
of each of the quarters for the period presented divided by (b) the
number of quarters in the period presented times two.

Adjusted average shareholders equity is (a) the sum of adjusted
shareholders equity at the beginning and end of each of the quarters
for the period presented divided by (b) the number of quarters in the
period presented times two.

Calculation of Return on Equity and Core

Return on Equity

Three Months Ended

March 31,

($ in millions, after-tax)

2017

2016

Annualized net income

$

2,470

$

2,766

Average shareholders equity

23,416

23,882

Return on equity

10.5 %

11.6 %

Annualized core income

$

2,455

$

2,791

Adjusted average shareholders equity

22,638

22,361

Core return on equity

10.8 %

12.5 %

Average annual core return on equity over a period is the ratio
of: a) the sum of core income less preferred dividends for the
periods presented to b) the sum of: 1) the sum of the adjusted
average shareholders equity for all full years in the period presented,
and 2) for partial years in the period presented, the number of quarters
in that partial year divided by four, multiplied by the adjusted average
shareholders equity of the partial year.

Underwriting gain is net earned premiums and fee income less
claims and claim adjustment expenses and insurance-related expenses. In
the opinion of the Companys management, it is important to measure the
profitability of each segment excluding the results of investing
activities, which are managed separately from the insurance business.
This measure is used to assess each segments business performance and
as a tool in making business decisions. Pre-tax underwriting
gain, excluding the impact of catastrophes and net favorable prior year
loss reserve development, is the underwriting gain adjusted to
exclude claims and claim adjustment expenses, reinstatement premiums and
assessments related to catastrophes and loss reserve development related
to time periods prior to the current year. In the opinion of the
Companys management, this measure is meaningful to users of the
financial statements to understand the Companys periodic earnings and
the variability of earnings caused by the unpredictable nature (i.e.,
the timing and amount) of catastrophes and loss reserve development.
This measure is also referred to as underlying underwriting margin
or underlying underwriting gain.

A catastrophe is a severe loss caused by various natural events,
including, among others, hurricanes, tornadoes and other windstorms,
earthquakes, hail, wildfires, severe winter weather, floods, tsunamis,
volcanic eruptions and other naturally-occurring events, such as solar
flares. Catastrophes can also be man-made, such as terrorist attacks and
other intentionally destructive acts including those involving nuclear,
biological, chemical, radiological, cyber-attacks, explosions and
infrastructure failures. Each catastrophe has unique characteristics and
catastrophes are not predictable as to timing or amount. Their effects
are included in net and core income and claims and claim adjustment
expense reserves upon occurrence. A catastrophe may result in the
payment of reinsurance reinstatement premiums and assessments from
various pools.

Net favorable (unfavorable) prior year loss reserve development
is the increase or decrease in incurred claims and claim adjustment
expenses as a result of the re-estimation of claims and claim adjustment
expense reserves at successive valuation dates for a given group of
claims, which may be related to one or more prior years. In the opinion
of the Companys management, a discussion of loss reserve development is
meaningful to users of the financial statements as it allows them to
assess the impact between prior and current year development on incurred
claims and claim adjustment expenses, net and core income (loss), and
changes in claims and claim adjustment expense reserve levels from
period to period.

Components of Net Income

Three Months Ended

March 31,

($ in millions, after-tax except as noted)

2017

2016

Pre-tax underwriting gain excluding the impact of catastrophes

and net favorable prior year loss reserve development

$

477

$

566

Pre-tax impact of catastrophes

(347 )

(318 )

Pre-tax impact of net favorable prior year loss reserve development

81

180

Pre-tax underwriting gain

211

428

Income tax expense on underwriting results

36

139

Underwriting gain

175

289

Net investment income

480

439

Other income/(expense), including interest expense

(41 )

(30 )

Core income

614

698

Net realized investment gains / (losses)

3

(7 )

Net income

$

617

$

691

COMBINED RATIO AND ADJUSTMENTS FOR UNDERLYING COMBINED RATIO

Combined ratio: For Statutory Accounting Practices (SAP), the
combined ratio is the sum of the SAP loss and LAE ratio and the SAP
underwriting expense ratio as defined in the statutory financial
statements required by insurance regulators. The combined ratio as used
in this earnings release is the equivalent of, and is calculated in the
same manner as, the SAP combined ratio except that the SAP underwriting
expense ratio is based on net written premiums and the
underwriting expense ratio as used in this earnings release is based on
net earned premiums.

For SAP, the loss and LAE ratio is the ratio of incurred losses and loss
adjustment expenses less certain administrative services fee income to
net earned premiums as defined in the statutory financial statements
required by insurance regulators. The loss and LAE ratio as used in this
earnings release is calculated in the same manner as the SAP ratio.

For SAP, the underwriting expense ratio is the ratio of underwriting
expenses incurred (including commissions paid), less certain
administrative services fee income and billing and policy fees, to net written
premiums as defined in the statutory financial statements required by
insurance regulators. The underwriting expense ratio as used in this
earnings release, is the ratio of underwriting expenses (including the
amortization of deferred acquisition costs), less certain administrative
services fee income, billing and policy fees and other, to net earned
premiums.

The combined ratio, loss and LAE ratio, and underwriting expense ratio
are used as indicators of the Companys underwriting discipline,
efficiency in acquiring and servicing its business and overall
underwriting profitability. A combined ratio under 100% generally
indicates an underwriting profit. A combined ratio over 100% generally
indicates an underwriting loss.

Underlying combined ratio represents the combined ratio excluding
the impact of net prior year reserve development and catastrophes. The
underlying combined ratio is an indicator of the Companys underwriting
discipline and underwriting profitability for the current accident year.

Other companies method of computing similarly titled measures may not
be comparable to the Companys method of computing these ratios.

Calculation of the Combined Ratio

Three Months Ended

March 31,

($ in millions, pre-tax)

2017

2016

Loss and loss adjustment expense ratio

Claims and claim adjustment expenses

$

4,094

$

3,712

Less:

Policyholder dividends

11

10

Allocated fee income

42

44

Loss ratio numerator

$

4,041

$

3,658

Underwriting expense ratio

Amortization of deferred acquisition costs

$

1,003

$

971

General and administrative expenses (G&A)

996

995

Less:

G&A included in Interest Expense and Other

8

8

Allocated fee income

71

73

Billing and policy fees and other

23

22

Expense ratio numerator

$

1,897

$

1,863

Earned premium

$

6,183

$

5,981

Combined ratio (1)

Loss and loss adjustment expense ratio

65.3 %

61.1 %

Underwriting expense ratio

30.7 %

31.2 %

Combined ratio

96.0 %

92.3 %

(1) For purposes of computing ratios, billing and policy

fees and other (which are a component of other revenues) are

allocated as a reduction of underwriting expenses. In addition, fee

income is allocated as a reduction of losses and loss adjustment

expenses and underwriting expenses.

RECONCILIATION OF BOOK VALUE PER SHARE AND SHAREHOLDERS EQUITY TO
CERTAIN NON-GAAP MEASURES

Book value per share is total common shareholders equity divided
by the number of common shares outstanding. Adjusted book value per
share is total common shareholders equity excluding the after-tax
impact of net unrealized investment gains and losses, divided by the
number of common shares outstanding. In the opinion of the
Companys management, adjusted book value per share is useful in an
analysis of a property casualty companys book value per share as it
removes the effect of changing prices on invested assets (i.e., net
unrealized investment gains (losses), net of tax), which do not have an
equivalent impact on unpaid claims and claim adjustment expense
reserves. Tangible book value per share is adjusted book value
per share excluding the after-tax value of goodwill and other intangible
assets divided by the number of common shares outstanding. In the
opinion of the Companys management, tangible book value per share is
useful in an analysis of a property casualty companys book value on a
nominal basis as it removes certain effects of purchase accounting
(i.e., goodwill and other intangible assets), in addition to the effect
of changing prices on invested assets.

RECONCILIATION OF TOTAL CAPITALIZATION TO TOTAL CAPITALIZATION
EXCLUDING NET UNREALIZED INVESTMENT GAINS, NET OF TAX

Total capitalization is the sum of total shareholders equity and
debt. Debt-to-capital ratio excluding net unrealized gain on
investments is the ratio of debt to total capitalization excluding
the after-tax impact of net unrealized investment gains and losses. In
the opinion of the Companys management, the debt to capital ratio is
useful in an analysis of the Companys financial leverage.

As of

March 31,

December 31,

March 31,

($ in millions)

2017

2016

2016

Debt

$

6,438

$

6,437

$

6,344

Shareholders equity

23,612

23,221

24,166

Total capitalization

30,050

29,658

30,510

Less: Net unrealized investment gains, net of tax

823

730

1,759

Total capitalization excluding net unrealized gain

$ 29,227

$ 28,928

$ 28,751

on investments, net of tax

Debt-to-capital ratio

21.4 %

21.7 %

20.8 %

Debt-to-capital ratio excluding net unrealized investment gains, net

22.0 %

22.3 %

22.1 %

of tax

OTHER DEFINITIONS

Gross written premiums reflect the direct and assumed
contractually determined amounts charged to policyholders for the
effective period of the contract based on the terms and conditions of
the insurance contract. Net written premiums reflect gross
written premiums less premiums ceded to reinsurers.

For Business and International Insurance and Bond & Specialty Insurance, retention
is the amount of premium available for renewal that was retained,
excluding rate and exposure changes. For Personal Insurance, retention
is the ratio of the expected number of renewal policies that will be
retained throughout the annual policy period to the number of available
renewal base policies. For all of the segments, renewal rate change
represents the estimated change in average premium on policies that
renew, excluding exposure changes. Exposure is the measure of
risk used in the pricing of an insurance product. The change in exposure
is the amount of change in premium on policies that renew attributable
to the change in portfolio risk. Renewal premium change
represents the estimated change in average premium on policies that
renew, including rate and exposure changes. New business is the
amount of written premium related to new policyholders and additional
products sold to existing policyholders. These are operating
statistics, which are in part dependent on the use of estimates and are
therefore subject to change. For Business and International Insurance,
retention, renewal premium change and new business exclude National
Accounts and surety. For Bond & Specialty Insurance, retention, renewal
premium change and new business exclude surety.

Statutory capital and surplus represents the excess of an
insurance companys admitted assets over its liabilities, including loss
reserves, as determined in accordance with statutory accounting
practices.

Holding company liquidity is the total funds available at the
holding company level to fund general corporate purposes, primarily the
payment of shareholder dividends and debt service. These funds consist
of total cash, short-term invested assets and other readily marketable
securities held by the holding company.

For a glossary of other financial terms used in this press release, we
refer you to the Companys most recent annual report on Form 10-K filed
with the SEC on February 16, 2017, as updated by our Form 10-Q filed on
April 20, 2017, and subsequent periodic filings with the SEC.